Renewable Energy is Going from Strong to Stronger

Despite setbacks like the Trump administration pulling the US from the landmark Paris Agreement, renewable energy is continuing to grow and get cheaper.

We’ve known for several years now that even as fossil fuels prices have gone up, renewable energy prices have been decreasing across the globe. Wider-scale adoption is driving innovation in the market, which in turn is creating greater investment opportunities for big businesses and national economies.

Now, news comes that based on figures from the past couple of years, renewable energy prices have dropped sharply, with investment going up and capacity increasing–all this despite subsidies for green energy being, on average, far less than those for the fossil fuel industry.

The greater “bang-for-buck” resulted from plummeting prices for solar and wind power and led to new power deals in countries including Denmark, Egypt, India, Mexico and the United Arab Emirates all being priced well below fossil fuel or nuclear options.

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Vivien Foster, global lead for energy economics at the World Bank, said: “Over 2016 there has been a dramatic and sustained improvement in the competitiveness of renewable power generation technologies. The most spectacular renewable energy prices were revealed through auctions that are gaining in popularity in many countries.”

One of the biggest driving factors for falling prices on renewables has been India’s solar power market. The price of India’s solar generated electricity hit a record low in May, with the Independent calculating that the “latest solar power tariffs show the price of solar energy is 18 per cent lower than the average price for electricity generated by coal-fired plants.”

This meant that at a recent auction in Rajasthan, the companies Phelan Energy and Aaada Power settled on a price of just 2.62 rupees (kWH) for solar-generated electric power, which works out today at about 0.041 dollars. A price of 3.15 rupees had been the previous low.

That’s a significant difference, and it’s already affecting India’s future investment portfolio. India has been cancelling investment plans for fossil fuel plants at an impressive rate; for example, Uttar Pradesh cancelled bids for 3.8 gigawatts of coal-fired power because it had a surplus. Essar Power, meanwhile, has had to put one coal-fired power plant in for debt relief due to the fact that the Indian market’s low solar prices, among other things, are making coal-fired power comparatively too pricey. That’s a big landmark because traditionally greener energy has still been costing more than fossil fuels. It’s also true that India still has a long way to go to quitting its coal dependence, but this shows the tide may be turning.

This is good news for India on a couple of fronts. One certainly is that, like China, it is looking to lead the world in the renewables market and is making significant strides in doing so. This will hopefully translate to an economic boom that will help raise standards of living for the entire nation. Secondly, India has ratified the Paris Agreement but as those who watched the unfolding talks will remember, India had serious reservations about what agreeing to reduce its emissions might mean for the nation. As such, a thriving domestic renewable energy market seems to be giving India more confidence and it has already made some strides toward fulfilling its commitments.

As briefly touched on above, China has of course also invested a great deal of money and resources into wind and solar energy, and with companies like Lego and other major brands working with China, that appears to be paying off.

Unfortunately for the US, with the Trump administration backing fossil fuels instead of the renewables that world leaders and analysts say we need, there seems to be little chance of a similarly ambitious plan coming from the highest levels of office at the moment. However, it’s not all doom and gloom with individual states demonstrating that they can take the lead on renewables. California, for example, saw its wholesale electricity prices drop to zero or even negative numbers (click through for an explanation of how that works) in March of this year thanks to its solid commitment and cultivation of solar energy yielding a high surplus. Even states that traditionally have been major fossil fuel industry states like Kentucky are now turning to, among other things, solar energy as they see the viability of coal drop off.

This is all good news, but the situation is not all rosy. Many national governments continue to prop up the fossil fuel industry through grants and incentives, while the industry itself is lobbying hard to stress that natural gas can be a greener energy alternative that it can provide–despite the fact that the idea of greener fossil fuels has largely been discredited. There are also significant challenges to bringing renewable energy to the market in ways that do not violate human rights and environmental protections; we can’t forget that such operations require large geographic areas, and hydro power in particular can be a major headache to get right, as Brazil has found.

These serious issues acknowledged, it is pleasing to see that renewable energy is once again proving that it can be a force in the market, even when global powers like the US government are working hard to retard its growth. There is a green energy revolution underway, and it is happening in spite of all these challenges.

Paul B. False information: the subsidies were only to establish infrastructure, which duh is necessary for any new industry. The newer technologies have made solar for instance, cheaper than fossil fuel based energy to produce. That is a fact, and there's nothing the coal and oil terrorists can do to change the market forces.

Paul B.,
Agreed. IF that is the case, it will succeed on its own (without government subsidies), and no one (not even Trump) will be able to stop it. Until then, people can hype it all they like, but it will not replace current sources until it becomes more efficient.

If renewable is so great and cost efficient, then there is no need for government intervention with grants and subsidies that are basically keeping the current green energy afloat. I am not against solar and wind power, but not at taxpayer expense. Once it can compete on its own, then it will truly be viable. So far, that has not been the case.